Shell PLC (LSE:SHEL, NYSE:SHEL)’s new chief executive Weal Sawan will have to convince investors over plans to make the company Europe’s “premium sector name” on June 14’s capital markets day, analysts say.
A material dividend hike, updates on operational and capital expenditure discipline and a renewed focus on growing high-return areas should win over investors, Jefferies noted.
Weal Sawan rose to the role of Shell chief executive in January, amid growing questions around the oil giant’s future commitment to lower carbon fuels.
Shell may signal a shift to “traditional business areas as it re-evaluates the focus on certain low-carbon areas,” however, Jefferies predicted, given investor concern over increased operating costs since 2020.
A change in Shell’s shareholder distribution policy is also “widely expected,” analysts said, with a current policy of returning 20% to 30% of cash flow likely to be lifted.
Changes to Shell’s emission-reduction targets to become net-zero by 2050 are not expected, Jefferies added, after climate protestors hit the company’s annual meeting this month.
Jefferies tipped Shell a ‘buy’ ahead of the next update, alongside offering a share price target of 3,000p, up 28% on Friday’s opening.